World Bank okays $750m for Nigeria’s 36 states to improve governance

The World Bank is set to disburse the second and final tranche of $750 million to Nigeria’s 36 states as part of a plan to improve governance.

The money will be distributed under World Bank’s States Fiscal Transparency, Accountability, and Sustainability (SFTAS) Programme.

The initiative is aimed at providing technical assistance to states to enable them  achieve the Federal government’s 22-point Fiscal Sustainability Plan.

The SFTAS Programme, which will formally end in December, also builds the capacity of civil society organisations (CSOs) to ensure the sustainability of the SFTAS reforms beyond the programme’s timeline of 2018 – 2022.

The World Bank office at the Ministry of Finance coordinating the programme is reportedly fine-tuning the process of disbursing the money to the 36 states.

The Federal government had given conditions which states must meet in order to benefit from the international Development Association (IDA) credit facility.

The grant is designed to strengthen the fiscal transparency, accountability and sustainability in states as a way of improving their revenue base, increasing fiscal efficiency in public expenditure and reducing debt overhang.

To qualify for the facility in 2022, state governments are expected to first achieve Disbursement Linked Indicators (DLIs) in 2021.

For the states to meet the DLI II in 2021, the Federal government is demanding that citizens’ inputs from formal public consultations be published online, along with the proposed 2022 budget.

The states are to execute citizens’ budget based on the approved 2021 State budget published online by the end April 2021 with functional online feedback mechanisms.

The State governments are also required to create a Citizens Accountability Report based on audited financial statements and reports published online for 2020 not later than the end of September.

The Fiscal Sustainability Plan has now been redesigned as the nine Disbursement Linked Indicators under SFTAS.

To benefit from the grant, state governments are required to achieve improved financial reporting and budget reliability; increased openness and citizens’ engagement in the budget process; improved cash management and reduced revenue leakages through the implementation of State Treasury Single Account (TSA); strengthened internally generated revenue (IGR) collection; biometric registration and Bank Verification Number (BVN) used to reduce payroll fraud.

SFTAS is now under full implementation with all 36 States participating in the programme.

In 2018, the first performance year, 24 States met the eligibility criteria and achieved on average five DLI results each and they got the total sum of N43.416 billion or $120.6 million of performance-based grants.

In 2019, the first performance year, 32 States met the eligibility criteria and achieved on average, eight results each. They got a total sum of $239.6 million of performance-based grants.

For the 2020 verified results, states performed well with all 36 States achieving COVID-19 responsive results in 2020.

In total, $692.7 million has been disbursed to date to 36 states in performance-based grants.

According to the SFTAS office, already, two-thirds of states are engaging citizens in their budget process and publishing citizens budgets; 17 states have achieved annual IGR growth of at least 20 per cent in 2019 of which 11 States increased their IGR by more than 40 per cent.

In addition, two-thirds of the states are addressing payroll fraud through linking biometric data and Bank Verification Numbers to payroll; two-thirds of the states passed fiscal responsibility and public debt laws and several states have started to clear their domestic expenditure arrears owed to contractors, civil servants and pensioners.

– Media Report

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